The United Nations owed more than USD 250 million to troop- and police-contributing countries at the end of 2018 and again at the end of the first quarter of 2019.
Secretary General Antonio Guterres has said he had contemplated selling his official four-story residence in New York when he took charge as the UN chief to help resolve the deteriorating financial crisis facing the world body. The Secretary General’s official residence is in Sutton Place, an exclusive Manhattan enclave off the East River. “Looking at the Organisation’s overall finances, and its financial ratios, can be misleading. We have of course more assets than liabilities but not enough liquid assets. I cannot sell this building,” Guterres said Tuesday in his remarks to the General Assembly’s Fifth Committee on ‘Improving the Financial Situation of the Organisation’. He told the delegates present at the meeting that the first thing he did when he arrived in New York to assume charge as the UN Chief was to ask if he could sell the residence.
“I am not joking. It is a true story. I discovered that I couldn’t, because the residence can only be sold to the United States of America when we close the doors in New York. Obviously, it is not something that is not, hopefully, going to happen.” According to a 2007 New York Times report, the General Assembly had at the time approved a USD 4.5 million renovation of the residence, which is a 14,000-square-foot neo-Georgian town house with four floors and a basement. The NYT report had added that the residence was once home to daughter of financier J P Morgan, Anne Morgan and was donated to the United Nations in 1972. Guterres voiced strong concern over the deteriorating financial health of the UN, attributing the budget crisis to increase in arrears from member states in both the regular and peacekeeping budgets as well as inherent structural weaknesses and rigidities in the budget methodologies that exacerbate cash shortfalls.
“At the end of 2018, we have really reached the bottom,” he said adding that the level of arrears at the end of 2018 was USD 529 million, equivalent to more than 20 per cent of the year’s assessments. Five months into this year, arrears are still at USD 492 million, he said. Guterres told the delegates that apart from the regular budget operations, peacekeeping operations constantly face liquidity challenges and the cumulative cash balances of peacekeeping operations are decreasing due to increasing arrears and late payments.
“Outstanding contributions to active peacekeeping operations amount to USD 1.5 billion. At the end of May, despite a cash balance of USD 1.3 billion, which could theoretically cover our operations for about two months, two large missions had cash to cover a mere two weeks of operations, and three missions were already in deficit,” he said.
The United Nations owed more than USD 250 million to troop- and police-contributing countries at the end of 2018 and again at the end of the first quarter of 2019. This debt is likely to again exceed USD 400 million at the end of June 2019, similar to the situation at the end of June 2018, Guterres said. “The United Nations is now financed for prolonged periods by troop- and police-contributing countries. Many of them are low-income countries. At the same time, we are asking them to do more — to train their personnel and to improve the quality of their equipment,” he added. The UN Chief stressed that when cash runs low, peacekeeping missions prioritize payments of salaries to their personnel and to those contractors that are inevitable, and to commercial vendors to avoid disruptions in operations.
“The consequence is that the shortage of cash tends to result in delays in payments to troop- and police- contributing countries. These countries have become, in essence the financiers of the Organisation’s liquidity. Which means that, we have not decided that that would happen, but the absence of other decisions makes this inevitable, so, it is as if we have collectively decided that to finance the UN, it is the mission of police and troop contributing countries, even if they are extremely poor,” he said.
Proposing measures to handle the financial crisis at the UN, Guterres said it is important to manage the cash balances of all active peacekeeping operations as a pool, create a Peacekeeping Working Capital Fund of USD 250 million that would give active operations about two months of operating costs, including payments to troop- and police-contributing countries and to temporarily suspend the obligation to return unencumbered balances to Member States. “I have done everything within my power to encourage Member States to fulfill their financial obligations towards the Organization, and I will go on consistently doing the same…But we are still nowhere near where we need to be…We risk undermining our work and our reforms if we do not urgently and squarely address the deteriorating financial situation,” he said.